Arhaus, Inc. · NASDAQ:ARHS
Arhaus — Investor Presentation (March 2023)
35 slides from Arhaus's investor presentation, Mar 10, 2023
Slide 1: Arhaus Investor Presentation March 2023
Slide 2: Note on Forward-Looking Statements
NOTE ON FORWARD-LOOKING STATEMENTS: Certain statements contained herein are not based on historical fact and are “forward-looking statements” within the meaning of applicable securities laws, Forward-looking statements can generally be identified by the use of forward-looking terminology, including,
Slide 3: Our Mission
OUR MISSION We were founded in 1986 on a simple idea: furniture should be responsibly sourced, lovingly made and built to last. 1 the mium and world who share our vision, creating p lients can heirloom-quality f 1e furnishings th: use for generations We believe Retail is Theater and that furniture s
Slide 4: The Green Initiative
THE GREEN INITIATIVE 7reirloom down for TOGETHER WE WILL MAKE A DIFFERENCE COMMITMENT TO BEING RESPONSIBL ROOTED IN SUSTAINABILITY. BEAUTIFULLY MADE, SUSTAINABLY SOURCED. HANDCRAFTED IN NORTH CAROLINA. 10 YEARS, ONE MILLION TREES. TOGETHER FOR A CLEAN OCEAN. EVERY DONATION MAKES A DIFFERENCE.
Slide 5: Company Overview and Our Financial Momentum
COMPANY OVERVIEW 1 OUR FINANCIAL OUR COMPANY PROFILE OUR MOMENTUM 82 $1, 229MM SHOWROOMS FULL YEAR 2022 i 5A% NET REVENUE INCREASED FULL YEAR 2022 NET REVENUE Be $223M STATES ADJUSTED EBITDA’ ~52% HeLRONG. COMPARABLE GROWTH 2, 100+ DEBT-FRE EMPLOYEES BALANCE SHE EEIs TAS of Dateniber 31, 2022: Showw
Slide 6: $176 $200 $330 $525 43% 2019 2020 2021 2022 $50 $69 $123 $223 2019
$176 $200 $330 $525 43% 2019 2020 2021 2022 $50 $69 $123 $223 2019 2020 2021 2022 $495 $507 $797 2019 2020 2021 2022 11% 18% 18% 17% 2019 2020 2021 2022 4% 25% 45% 14% 2019 2020 2021 2022
Slide 7: Premium Home Furnishings Market Is Highly Fragmented with Large, Rapidly Growing TAM
THE PREMIUM HOME FURNISHINGS MARKET? IS HIGHLY FRAGMENTED WITH A LARGE AND RAPIDLY GROWING TAM 2022 U.S. PREMIUM HOME FURNITURE MARKET! RAPIDLY GROWING & HIGHLY FRAGMENTED * Total addressable market of ~$100 billion * Highly fragmented and predominantly served by small local players 1 00B * Premiumi
Slide 8: Strong Industry and Market Tailwinds Driving Growth
STRONG INDUSTRY AND MARK TAILWINDS DRIVING GROWTH Three primary drivers of furniture and decor purchases': 1, In-hor cement High income households growing — disproportionately large share of wallet Higher consumer confidence among affluent customers Increase in suburbanization — larger homes support
Slide 9: Arhaus
ARHAUS
Slide 10: Investment Highlights
INVESTMENT HIGHLIGHTS Strong Product Design and Direct Global Sourcing Partnerships A Differentiated Concept Delivering Livable Luxury Highly Experiential Omni-Channel Approach Multiple Avenues for Sustainable Growth
Slide 11: Arhaus
ARHAUS
Slide 12: Premium Lifestyle Brand with a Differentiated Concept
PREMIUM LIF WITH A DIFF EXCLUSIVELY-DESIGNED, PREMIUM PRODUCTS OMNI-CHANNEL RETAIL IS THEATER EXPERIENCE CLIENT-FIRST SERVICE We focus on livable luxury with Our inspirational showrooms Our digital and catalog are focused on clients first artisan-crafted, globally 2 truly unique, providing the exper
Slide 13: Livable Luxury
LIVABLE LUXURY We believe in creating beautiful and comfortable furniture made to fit your life PERFORMANCE FABRIC BUILT TO LAST SUSTAINABLE MATERIALS COMFORT ECLECTIC STYLE
Slide 14: Design and Direct Sourcing
ARHAUS AND DIRECT SOURCING
Slide 15: Heirloom-quality, unique, artisan-crafted products
Arhaus is known for heirloom-quality, unique, artisan: for everyday life, believe that furniture should v THE BELL’ARTE COLLECTION ORIGIN: ITA Over 20 years ago, we discovered a small family-run artisan woodworking s! lorthern Skilled artisans use generations old techniques and the finest materials
Slide 16: Direct Sourcing Drives Competitive Advantage
DIRECT SOURCING DRIVES COMPETITIVE ADVANTAG O t sourcing model nest ing demand DEEP ROOTED RELATIONSHIPS COMPETITIVE ADVANTAGE * Over 400 vendors QUALITY AND AESTHETIC ing relationships ale markup PERSONALIZATION AND CUSTOMIZATION * Flexible speed to market * ~40% of net revenue from U.S: Pecan crem
Slide 17: Internal Manufacturing
RNAL MANU RHAUS ~12% OF 2022 NET REVENUE 2X RECENT PRODUCTION EXPANSION ENABLED US TO DOUBLE CAPACITY
Slide 18: Omni-Channel Approach
ARHAUS OMNI-CHANNEL APPROACH
Slide 19: Omni-Channel Ecosystem
OMNI-CHANNEL ECOSYSTEM SHOWROOM eCOMMERCE CATALOG AND MARKETING
Slide 20: Theater-Like Showrooms
THEATER-LIK SHOWROOMS Our visually captivating, theater-like showrooms drive brand awareness and create meaningful marketing buzz and revenue uplift when opened in new mart * Showrooms drive in-showroom revenue as well as eCommerce revenue + Theater-like and inspirational atmosphere that helps clien
Slide 21: Adept and Knowledgeable Showroom Team
ADEPT AND KNOWLEDGEABI SHOWROOM TEAM Visual Managers work to create the “wow” showroom experience. Design Consultants are expertly trained to meet the clients’ needs and are highly knowledgeable about all products offered in-showroom Weekly meetings and routine training enable the showroom team to t
Slide 22: Omni-Channel Capabilities and Digital Tools
OMNI-CHANNEL CAPABILITI AND DIGITAL TOOLS ES eCOMMERCE IS OUR FASTEST GROWING REVENUE CHANNEL 43% 17% GROWTH IN OF 2022 NET eCOMMERCE NET REVENUE WAS REVENUE IN 2022 eCOMMERCE BASED >28M > 1.2M WEBSITE VIEWS INSTAGRAM IN 2022 FOLLOWERS JANUARY AND SEPTEMBER CATALOGS ARE MAILED TO MILLIONS OF HOUSEHO
Slide 23: Growth Strategies
ARHAUS GROWTH STRATEGIES
Slide 24: Our Growth Strategies
OUR GROWTH STRATEGIES INCREASE BRAND AWARENESS TO DRIVE SALES EXPAND OUR SHOWROOM BASE AND CAPTURE MARKET SHARE ENHANCE OMNI-CHANNEL CAPABILITIES AND TECHNOLOGY TO DRIVE GROWTH INVEST IN GROWTH TO BUILD SCALE AND ENHANCE MARGINS
Slide 25: Increase Brand Awareness to Drive Sales: Opportunity
INCREASE BRAND AWARENESS TO DRIVE SALES: OPPORTUNITY We believe Arhaus has an incredible brand awareness opportunity as compared to competitors in the U.S, Premium Home Furnishings Market.1 As we continue to grow our showroom footprint and to invest in our digital, catalog and other marketing channe
Slide 26: Brand Awareness Opportunity
BRAND AWARENESS OPPORTUNITY SHOWROOM DIGITAL DIRECT MAIL BRANDING INITIATIVES. PRODUCT ARHAUS
Slide 27: Traditional Showroom Footprint: Tremendous Whitespace Opportunity
TRADITIONAL SHOWROOM FOOTPRINT: TREMENDOUS WHITESPACE OPPORTUNITY lop new showrooms through analys cific marke eristics, s, NY TRADITIONAL SHOWROOM WHITESPACE POTENTIAL" fe 165+ 4 . a 3 sate iy x ay : i esor ° = 72 : x © cd = . A eres @ TRADITIONAL, % e oes . CURRENT POTENTIAL 2 | 28 | 90+ TRADITION
Slide 28: Design Studio Opportunity
"As of March 10, 2028, EPT: D ESIGN STUDIO OPPORTUNITY We are expanding our exciting smaller format concept, perfect for second home markets and locations where a lower square footage format is preferred. These stores are staffed with in-home designers and the latest high tech design tools to assist
Slide 29: Strong Returns on Investment
• strong returns on investment. •
Slide 30: Designer Program
DESIGNER PROGRAM nd our in-home desi ler program, expanding our coverage both in and online designers resonate with clients and drive AOV uplift TOTAL AOV YTD 2022! REALITY NO IN-HOME DESIGNER AOV IN-HOME DESIGNER AO\ Our 84 in-home designers in 65 showrooms* fer complimentary ir i These in-home des
Slide 31: Enhance Omni-Channel Capabilities and Technology to Drive Growth
ENHANCE OMNI-CHANNEL CAPABILITIES AND TECHNOLOGY TO DRIVE GROWTH BENCHMARKING VS. PEERS IMPLIES ROBUST ECOMMERCE OPPORTUNITY eCOMMERCE % OF NET REVENUE 43% 18% 18% 47% 11% ARHAUS ARHAUS ARHAUS ARHAUS OTHER 2019-2020 2021 = 2022 PREMIUM PEERS 2019 'As of December 31, 2022. AOV AND TRAFFIC AO} TRAFFIC
Slide 32: Investing in Growth to Meet Demand, Build Scale and Enhance Margins
INVESTING IN GROWTH TO MEET D EMAND, BUILD SCALE AND ENHANCE MARGINS VENDOR CAPACITY DISTRIBUTION/MANUFACTURING FACILITY A oistrisution FaciLity sf HEADQUARTERS - OFFICE AND DISTRIBUTION FACILITY SUPPLY CHAIN CAPACITY * New North Carc of distribution in 202!
Slide 33: Our Long Term Growth Goals
OUR LONG TERM GROWTH GOALS' G TERM GOALS? MID-TO-HIGH SINGLE DIGIT “These are not projections or predictions of actual results; they are aspirational goals as of March 10, 2023 and are forward-looking, subject o significant business, economic, regulatory and competitive uncertainties and Contingenci
Slide 34: Arhaus Appendix
ARHAUS
Slide 35: Adjusted EBITDA Reconciliation
December 31, December 31, December 31, December 31, ($ in thousands) 2022 2021 2020 2019 Net income $ 136,634 $ 36,932 $ 17,040 $ 15,842 (+) Interest expense 3,387 5,432 13,057 13,449 (+) Income tax expense (benefit) 45,944 (10,144) 783 368 (+) Depreciation and amortization 24,901 23,922 16,957 15,9